TaxTMI 
TaxTMI 
2022 (8) TMI 749
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....led. The relevant part reads as follows: "9. In the above backdrop, it is evident that you hold beneficial ownership in the abovementioned foreign entities and have undisclosed foreign assets that are not disclosed in India. Hence, there is reason to believe that income in relation to any assets (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment in your hands. 10. Keeping in view the principles of natural justice, you are hereby required to show cause as to why you should not be held as the beneficial owner of the above-mentioned foreign entities and why transactions conducted by the foreign entities are not to be treated as for yours and your family's personal benefits. You are also required to show cause as to why the abovementioned foreign assets and income should not be assessed in your hands under the BM Act. You are hereby allowed an opportunity of being heard and an opportunity to offer your explanation along with relevant books of account or any other documents or evidences in support of your explanation, if any. 11. Please note that this Show Cause Notice issued u/s 10(1) of the BM Ac....
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....;IT Act'] for the Assessment Years 2009-10 to 2015-16. The petitioner's statement is recorded under Section 132[4] of the IT Act as regards certain transactions amongst different entities^2. The Assessing Officer's order is dated 30.12.2016, and this order is after necessary approval from the concerned Joint Commissioner under Section 153-D of the IT Act. 4. The Assessing Officer has concluded that the petitioner had availed loan from M/s. Romulus Assets Limited [M/s. RAL], one of the entities mentioned in the Impugned Notice, and the petitioner's wife has also transacted with M/s. RAL, which has paid for petitioner's insurance. Insofar as the other entities, the Assessing Officer has opined that M/s. RAL has had multiple transactions with such entities. The Assessing Officer, in the light of these conclusions, has found that the petitioner is a Beneficial Owner and that M/s. RAL's income and expenditure must be treated as the petitioner's business income and expenditure. 5. The petitioner's group appeals before the Commissioner of Income Tax [A] as against the Assessing Officer's aforesaid similar but different orders of assessment are dismissed on 25....
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....dictional fact" is a condition precedent and only if the "jurisdictional fact" is found to exist, the Court or the Tribunal or the Authority can assume jurisdiction to decide adjudicatory facts or facts in Issue. He relies upon the decision of the Hon'ble Supreme Court in 'Arun Kumar and Others v. Union of India' [2007] 1 SCC 732 in support of his submissions in this regard, and he draws the attention of this Court to Paragraph 84 which reads as under: "84. From the above decisions, it is clear that existence of "jurisdictional fact" is sine qua non for the exercise of power. If the jurisdictional fact exists, the authority can proceed with the case and take an appropriate decision in accordance with law. Once the authority has jurisdiction in the matter on existence of "jurisdictional fact", it can decide the "fact in issue" or "adjudicatory fact". A wrong decision on "fact in issue" or on "adjudicatory fact" would not make the decision of the authority without jurisdiction or vulnerable provided essential or fundamental fact as to existence of jurisdiction is present." 8. Sri. Shashi Kiran Shetty submits that neither a Court nor a Tribunal nor an Authority....
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....essing Officer's opinion. 8.5 Unless the Assessing Officer calls for explanation on the investment in such assets, and the explanation offered is found to be unsatisfactory, or if no explanation is offered, an individual cannot be called a "Beneficial Owner". The Assessing Officer's opinion, after an opportunity to offer explanation, is a sine qua non for the determination of the "jurisdictional fact". 9. Sri. Shashi Kiran Shetty canvasses that an Assessing Officer must hold an enquiry to adjudicate on whether an assessee has invested or utilized any undeclared income chargeable under the IT Act to own an Undisclosed Asset located outside India before issuing notice under Section 10[1] of the BM Act, and he draws parallels with the requirement of an enquiry with an opportunity of hearing before reopening a concluded assessment under the provisions of Section 148A of the IT Act and certain provisions in the Benami Transactions [Prohibition] Act, 1988. 10. Sri. Shashi Kiran Shetty submits that in the present case, with the decision in the proceedings before the ITAT, it is conclusively held that the concerned under the IT Act have failed to establish that the petitioner ....
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....s warrant, will decide on the "Undisclosed Foreign Income and Asset" and determine the liability payable of such person under Section 10[3] of the BM Act. 13. Sri. K.V. Aravind is unequivocal that, as part of enquiry under Section 10[2] of the BM Act, the Assessing Officer will examine the "jurisdictional fact" of whether the person to whom notice is issued (and if necessary, after further notices are issued as provided for under Section 10[1]) would be the Beneficial Owner of an Undisclosed Asset for the purposes of the BM Act because the provisions of Section 10 the BM Act contemplate enquiry even for the purposes of deciding whether a person would be a Beneficial Owner and not just for the purposes of assessment and re-assessment. 14. Sri. K.V. Aravind relies upon the decision of the Hon'ble Supreme Court in Commissioner of Central Excise, Haldia v. M/s Krishna Wax [P] ltd[2020] 12 SCC 572, a decision rendered in the context of Section 11A of the Central Excise Act, 1944, to bolster his submission that the provisions of Section 10 of the BM Act cannot be construed as contemplating a segregated preliminary determination on "the jurisdictional fact" and a separate enquiry fo....
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....ment under the BM Act only if it is found, as a jurisdictional fact, that a person [an assessee] owns or holds Undisclosed Asset located outside India and is acquired utilizing income which is not offered to tax, or which has escaped tax, under the provisions of the IT Act. 16. The respondents also do not dispute that a person must be extended an opportunity to offer explanation before there is adjudication of the aforesaid "jurisdictional fact". However, they contend that the "jurisdictional fact" must be examined as part of enquiry under Section 10[2] of the BM Act leading to an assessment under Section 10[3] thereof if the circumstances so warrant. They assert that hence the petitioner is extended such opportunity in issuing Notice. This Court must at this stage record that the Impugned Notice in this regard reads as under: "Keeping in view the principles of natural justice, you are hereby required to show cause as to why you should not be held as the beneficial owner of the above-mentioned foreign entities and why transactions conducted by the foreign entities are not to be treated as for yours and your family's personal benefits." 17. The petitioner contends....
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....his notice, serve on any person, a notice requiring him on a date to be specified to produce or cause to be produced such accounts or documents or evidence as the Assessing Officer may require for the purposes of this Act and may, from time to time, serve further notices requiring the production of such other accounts or documents or evidence as he may require. (2) The Assessing Officer may make such inquiry, as he considers necessary, for the purpose of obtaining full information in respect of undisclosed foreign income and asset of any person for the relevant financial year or years. (3) The Assessing Officer, after considering such accounts, documents or evidence, as he has obtained under sub-section (1), and after taking into account any relevant material which he has gathered under sub-section (2) and any other evidence produced by the assessee, shall by an order in writing, assess or reassess the undisclosed foreign income and asset and determine the sum payable by the assessee. (4) If any person fails to comply with all the terms of the notice under sub-section (1), the Assessing Officer shall, after taking into account all the relevant material wh....
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....ntral Excise, Haldia v. M/s Krishna Wax [P] Ltd., supra, the significance of the date of issuance of notices will also have to be borne in mind when admittedly, the date of issuance of show-cause notice becomes vital for the purpose of limitation under the BM Act. If as contended on behalf of the petitioner, enquiry on the "jurisdictional fact" and assessment are segregated, despite the scheme under section 10, there would be serious ramifications but without the necessary redressal. 25. Furthermore, the settled proposition is that in construing fiscal statutes and in determining the tax liability, the strict rules of interpretation will have to be followed without adding or importing significance beyond the language used in such statutes. In the light of the above, and the respondents' admitted position that the Assessing Officer must necessarily decide on the "jurisdictional fact" viz., whether the petitioner could be called a Beneficial Owner of the specified Undisclosed Asset considering the material that the petitioner produces, and there will be sufficient opportunity to the petitioner to produce further documents, this Court must answer the first question in the negat....
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....'information' and not on receipt of 'intelligence'. b. Taking into consideration the scheme of the BM Act, the term 'information' used in section 10 of the BM Act should be construed to imply the following. {1} The information is of prima facie undisclosed foreign asset/income [such as information of foreign bank account, property, investment, financial interest in an offshore entity, beneficial ownership of foreign asset/income etc]. Few Illustrations of such information are: * Information of undisclosed foreign asset/income of an Indian person unearthed during search/survey/other investigation conducted in the case of that person or in the case of any person having any relation (business, non business or other) with such Indian person, OR * Information of undisclosed foreign asset/income of an Indian person received under a legal instrument such as tax treaty (DTAA/ TIEA /FATCA/ CRS/ OECD Convention on Mutual Assistance in Tax Matters, MLAT, etc) OR * Information of undisclosed foreign asset/income of an Indian person received from other law enforcement agency(LEA) which was unearthed during search/survey/other ....
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....ould be presumed to have had Information of the alleged transaction is very presumptuous, and no such presumption can be drawn at this stage to truncate the enquiry. Therefore, this Court cannot opine that the Impugned Notice is issued beyond thirty days from the date of Information and therefore prior approval had to be obtained. 32. As stated at the very outset, the Impugned Notice is very detailed and there are multiple references to different transactions between and amongst M/s. RAL and other entities. The Impugned Notice also refers to certain Minutes of Meetings and instances of payments with necessary documents illustrated. The transactions are multi-fold and make a complex web, and this Court, when the petitioner is yet to file response and produce documents/accounts/evidence, and the Assessing Officer is yet to consider those materials, cannot opine that the Impugned Notice lacks in material details or has not considered material circumstances, including the orders of ITAT in ITA Nos.1211-1217/BANG/2019. The question Nos.2 and 3 must therefore be answered in the negative and in favour of the respondents. In which event, the petitioner's challenge must fail. For ....